Delhi gas operators seek tax relief, loan restructuring to deal with lockdown impact

Pummeled by evaporating demand and fall in business due to the lockdown, city gas operators such as Adani Gas, GAIL and Torrent Gas have sought tax relief and loan restructuring to tide over difficult times.

Natrual Gas Society (NGS), which represents CNG and piped natural gas retailers in the country, has written to the Oil Secretary Tarun Kapoor seeking government support in expansion of the city gas distribution (CGD) business and the share of natural gas in the country's energy basket.

"The CGD sector has been among the worst hit during the current lockdown with consumption reduced by over 80 per cent and now, the further extension of the lockdown, this will only bring additional hardship to the industry," it wrote.

Barring supply of piped natural gas to households kitchens, all segments under the CGD have shown a sharp fall in gas offtake. "With falling demand, majority of the CGD entities are facing steep fall in revenue and margins and cash flow problems which could impact the ability to maintain the required investment/capex," it said.

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Slowdown in the overall economic activity, it said, can be a dampener for infrastructure capex plans especially under the newly awarded city gas licenses.

The association sought exemption of the CGD sector from excise duty (14 per cent) and a deferment of statutory tax compliances at least till September-December, 2020.

"Banks may be asked to restructure the loans and provide a moratorium on interest payments for at least another six months to help the sector to recover quickly," it wrote.

NGS wanted government-priced controlled gas to be allocated to CGD operators.

"Government should direct gas suppliers and transporters to bill CGD entities only for the quantities they consumed at normal prices / rates without any additional charges like excess gas, take-or-pay, imbalance etc," it said.

The association sought waiver of penalty for not making committed investment in a city gas area. "It is proposed that a deferment of at least 24 months in minimum work programme (MWP) be allowed post lockdown period and till the restoration of normalcy period in the industrial activities."

To help generate finances for investment and ease the financial stress being faced by the CGD entities, the Ministry of Petroleum and Natural Gas may consider financial assistance to the sector, it said, adding this could be through creation of a special fund. This could be through funding from the Oil Industry Development Board (OIDB) and the oil regulator PNGRB reserve.